EASY H1 trading using divergence and candle sticks

This system does not use any indicators except for the RSI as an oscillator. The RSI is used as a divergence "leading" indicator to "predict" possible price reversal point. In additon we will also look for a candle stick reversal pattern to solidify our decision. To make things more concrete, we will also look to see these reversal levels are occuring at a logical reactionary price levels, making our odds at winning the trade that much better.

I am not sure if someone else has already covered this way of trading in another thread, but if not and there is interest out there, I can certainly post some pointers and examples.

For short setup:
1- We look for the price to form a pinbar or bearish englufing candle stick pattern.
2- We now look at RSI(7) of the price close to see if there is divergence between it and the price. i.e the price has made a higher high but the RSI either stayed level or made a lower high.
3- Look to see that the RSI has gone above the 70 level where the first point of divergence is drawn.
4- now, zoom out a bit and look to see the level where all this is occuring. Is it around a round number, or previous support/resistance level? Is it at a fib ratio? This gives us more confidence in the trade, but it doesnot have to be present.

For Long setup:
1- We look for the price to form a hammer or bullish englufing candle stick pattern.
2- We now look at RSI(7) of the price close to see if there is divergence between it and the price. i.e the price has made a lower low but the RSI either stayed level or made a higher low.
3- Look to see that the RSI has gone below the 30 level where the first point of divergence is drawn.
4- now, zoom out a bit and look to see the level where all this is occuring. Is it around a round number, or previous support/resistance level? Is it at a fib ratio? This gives us more confidence in the trade, but it doesnot have to be present.

I will discuss entry and exit and trade management tomorrow if you guys care to read